As a former Executive Director of the World Bank I know that the columnists of the Financial Times have more voice than what I ever had, and therefore they might need some checks-and-balances.
Currently, having probably trampled on some delicate ego, I am a persona non grata at FT.
Would the child shouting out “the Emperor is naked” have his observation published in FT? Does the child need a PhD for that?

As I see it that report, which measures the volumes of funds sloshing around the globe, lacks the information needed to comprehend not only the causes of the current crisis, but also what is keeping us from being able to work ourselves out of the current crisis.

I refer of course to the global capital controls so inconspicuously imposed by regulators on bank’s credit flows, by means of allowing these to leverage so much more the expected risk and cost adjusted net margins when lending to what is perceived as “absolutely safe” than when lending to what is perceived as “risky”.

If only the McKinsey had explored how, because of these regulations, the perceived safe-havens in the world have and keep on becoming dangerously overpopulated, while the perhaps more productive but more “risky” bays are not being sufficiently explored, that could have opened many eyes, including of course McKinsey’s own.

Instead it recommends staying firm on course implementing the regulatory reforms initiatives that are currently on the way, even though Basel III, by adding liquidity requirements based on perceived risk, could only increase the border controls and protectionism that separates “The Infallible” from “The Risky”.

And when the reports mentions “unlocking what could be a major source of stable, long-term capital and higher returns at lower risk for savers and investors” one can only wonder where on earth they intend to stock the risks of the real economy? Are they thinking about some risk-sink similar to what is used in carbon sequestration? Under which backyard are those toxic deposits to be deposited?

The report speaks about the importance for financial institutions and regulators to have access to better information about risks, like “more granular and timely information from market participants” and “standardized rating systems”. That is indeed important, but the problem is that when both financial institutions make use of the same information simultaneously, as they do now, the banks in the interest rates and amounts of exposure, and the regulators in the capital requirements, then the whole system overdoses on that information, and crashes.

And blithely ignoring what is most constraining the access to bank credit of “The Risky”, the “constrained borrowers”, like large investments projects, infrastructure and SMEs, the report suggests that their needs should be taken care by a full range of new “public-private lending institutions and innovations funds, infrastructure banks, small-business lending programs and peer to peer lending and investing platforms”, as “this can increase access to capital for underserved sectors”. In other words it says: “Keep those filthy “risky” away from our banks, these belong to the AAAristocracy.

Really, is that the way we want to go? Is that the way we the Western World became prosperous? No way Jose! God make us daring!

Sir, McKinsey seems to have been captured by the same groupthink that has captured the Basel Committee and the Financial Stability Board, and some other regulators and experts. And that groupthink, sadly, has our real economies stalling and falling, gasping for that oxygen that risk-taking signifies.

Me and my constituency!

Me and my constituency!

FT, just so that you know:

Some very few regulators thinking they were capable of managing the bank risks of the world, caused and are still causing immense sufferings, and you Sir are refusing to help holding them accountable for that.

My wicked question to FT

When do banks most need capital, when the risky turn out risky, or when the "not-risky" turn out risky? --- Yep, I think so too!

Videos: The Financial Crisis

My credentials

I have more credentials than most to speak out on the financial crisis and the subprime financial regulations having spoken out loudly about that since 1997...which could be embarrassing to “experts” with weak egos.

Most of those who think of themselves so broadminded when asking for “out of the box thinking” are so very narrow-minded they can only accept what comes, if that outside box lies “within their own small networks”.

Thank you, Martin Wolf

And on July 12 2012 Wolf also wrote that when "setting bank equity requirements, it is essential to recognise that so-called “risk-weighted” assets can and will be gamed by both banks and regulators. As Per Kurowski, a former executive director of the World Bank, reminds me regularly, crises occur when what was thought to be low risk turns out to be very high risk."

And that is something that I of course also appreciate, but that yet makes me curious on why Wolf does not follow up on it.

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I don’t take comments here because I might not have the time to answer (or censor) them and I hate unanswered comments, but, if you want me to comment on something somewhere else invite me and I might show up: perkurowski@gmail.com

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Off-the-blog

One great perk I get from maintaining a blog like this is that it allows me to sustain many conversations with some great journalists who also need and wish to be kept “off-the-record” or as I call it “off-the-blog”.

Yet one wonders

Between January 2003 and September 2006, out of 138 letters to the editor that I sent to the Financial Times before I placed them on this blog they published these 15. Not bad! Thank you FT!

Unfortunately, since then and until the very last day of the decade, out of some 1.000 letters that you can find here, FT published none, zero, zilch. Of course FT is under no obligation whatsoever to publish any of my letters and of course one should not exclude the possibilities that my letters might have quite dramatically gone from bad to worse… yet one wonders.

My usual suspects are:

1. Someone in FT with a delicate ego feels his or her importance diminished by giving voice to a lowly non PhD from a developing country daring to opine on many issues of developed countries.

2. That FT has some sort of conflict of interest with the credit rating agencies that makes it hard for them to give too much relevance to someone who considers they have been given too much powers.

3. The FT establishment had perhaps decided there were only macro economic problems and not any financial regulation problems, and wanted to hear no monothematic contradictions on that.

4. That FT feels slightly embarrassed when someone repeatedly asks the emperor-is-naked type question of what is the purpose of the banks and realizing this was something FT should have itself asked a long time ago.

5. It is way too much oversight for FT to handle.

6. Or am I just supposed to be a living example of one half of the Financial Times motto, namely that of "without favour"Which one do you believe is closest to the truth?

A Blog is born

I like reading The Financial Times, or FT as it is known, and I frequently write letters to the editor and some of them that have indeed been kindly published, for which I feel thankful. But then I realized that all those letters to the editor that for reasons impossible for me to comprehend were never published, were condemned to an eternal silence not of their own fault, and so I decided to, at a marginal cost of zero, to resurrect them and keep them alive, right here.

English is not my mother language so bear with me and you’ll probably note when my letter has been published in FT by its correctness. Swedish is my mother language but I have not written anything serious in it for about 40 years and last time I tried, they just laughed their hearts out because of my démodés. Polish is my father language but, unfortunately, I do not speak a word of Polish, much less write it. Yes Spanish is my language, as I am from Venezuela and although I trust I write in it with great flair, I would still never dream of publishing an article in Spanish without having it edited by my wife.

And so friends here is my Tea with FT blog with my old and new letters to the editor. I hope you will share them with me now and again, and then again and again.

Welcome, and cheers, as I believe they say over there.

Per

PS. Just so that FT does not get too cocky and believe it is my only window to the world, I will now and again publish a letter sent to the editor of another publication.